Service of Construction of New Buildings or Civil Structure Classifiable Under Category of ‘Works Contract Service’: CESTAT [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the service of construction of new buildings or civil structures is classifiable under the category of ‘works contract service’. 

Kirti Infrastructures Ltd, the appellant assessee was providing the service of construction of a new building or a civil structure or a part thereof as its turnkey project of construction. 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand of service tax classified the service of the assessee under the category of ‘Commercial or Industrial Construction Service’. 

Nilesh Suchak, the counsel for the assessee contended that the construction service was provided by the assessee along with material and the assessee had submitted Value added tax return to claim that they had discharged the value-added tax on the works contract service. 

Further submitted that the construction service provided by the assessee was correctly classifiable under works contract service. Hence, the demand for Commercial or Industrial Construction Services was not sustainable. 

Prakash Kumar Singh, the counsel for the department relied on the decisions made by the lower authorities and contended that the service provided by the assessee was classified under commercial or industrial construction and the demand raised by the department was as per the law and liable to be sustained. 

The Bench observed that that the execution of the work with material and on such construction service the assessee had discharged the value added tax was satisfied, this clarifies that the service was Works contract Service.

The two-member bench comprising Ramesh Nair(Judicial) and C.L Mahar (Technical) quashed the demand for service tax and held that the service of new construction or civil structure was classifiable under works contract service. 

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